36 Million User Accounts Used to Study Corporate Misconduct – Is Yours?

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Remember back in 2015 when the dating site, Ashley Madison (AM), was hacked and 36 million user details were posted online, causing some level of personal angst for those named? Finance faculty members John M. Griffin and Samuel Kruger from the McCombs School of Business at The University of Texas at Austin published a study yesterday, using the AM data and public records, of the relationship between spousal infidelity and corporate misconduct in the Proceedings of the National Academy of Sciences. There was a surprisingly strong correlation within the data.

Griffin and Kruger examined professional behavior in 4 groupings totalling more than 11,200 individuals: Chicago police officers with substantial complaints, financial advisors engaging in misconduct, US Securities and Exchange Commission (SEC) white-collar criminals, and CEOs and CFOs of firms that engage in misconduct. In all 4 settings, they measured the relation between professional misconduct and personal usage of AM by matching data on individuals in the professional setting to AM transaction data. The first 3 settings demonstrated a link between personal AM usage and professional misconduct. The fourth setting goes a step further by linking the personal conduct of CEOs and CFOs to corporate outcomes. Detailed firm-level data allowed the researchers to examine this last setting most thoroughly.

They concluded that police officers and financial advisors who use the infidelity website are significantly more likely to engage in professional misconduct. Results are similar for US Securities and Exchange Commission (SEC) defendants accused of white-collar crimes, and companies with chief executive officers (CEOs) or chief financial officers (CFOs) who use the website are more than twice as likely to engage in corporate misconduct.

“This is the first study that’s been able to look at whether there is a correlation between personal infidelity and professional conduct,” Kruger said. “We find a strong correlation, which tells us that infidelity is informative about expected professional conduct.”

“More broadly, our findings suggest that personal and professional lives are connected and cut against the common view that ethics are predominantly situational. This supports the classical view that virtues such as honesty and integrity influence a person’s thoughts and actions across diverse contexts and has potentially important implications for corporate recruiting and codes of conduct. A possible implication of our findings is that the recent focus on eliminating sexual misconduct in the workplace may have the auxiliary effect of reducing fraudulent workplace activity”.

Abstract

Read the Paper
We study the connection between personal and professional behavior by introducing usage of a marital infidelity website as a measure of personal conduct. Police officers and financial advisors who use the infidelity website are significantly more likely to engage in professional misconduct. Results are similar for US Securities and Exchange Commission (SEC) defendants accused of white-collar crimes, and companies with chief executive officers (CEOs) or chief financial officers (CFOs) who use the website are more than twice as likely to engage in corporate misconduct. The relation is not explained by a wide range of regional, firm, executive, and cultural variables. These findings suggest that personal and workplace behavior are closely related.

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